Home loan settlements surge 54% for challenger bank

A non-major bank has seen significant growth in mortgage settlements over the last six months of 2016, offsetting a fall in net interest margin.

Industry super fund-owned bank ME has reported an after-tax underlying net profit of $40.4 million for the six months to 31 December 2016, a rise of 34 per cent on the previous corresponding period.

ME CEO Jamie McPhee said it was a strong result in the face of margin pressures that are expected to continue throughout the year.

Home loan settlements hit $3.2 billion for the six months, up 54 per cent compared to the previous corresponding period, while ME’s home loan portfolio grew 9 per cent to $20.6 billion. Total assets grew 6 per cent to $24.6 billion.

ME’s net interest margin declined 3 basis points to 1.46 per cent relative to the previous corresponding period due to competition for new customers and higher funding costs.

Majors also under pressure

The non-major is not the only mortgage provider facing margin pressure. A recent Morningstar analysis of ANZ's latest quarterly profit results has focused on falling margins and a “messy” trading update overall, despite the major lender’s strong performance.